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Weekend Edition06 Jun

China controls the global physical supply chains. It’s now making a concerted bid to capture digital supply chains as well through its digital Belt and Road Initiative (BRI). It aims to wrest global leadership from the US, at a time when the physical BRI corridor appears unviable after the pandemic. India is a vital cog in Beijing’s plans.

P&G subsidiary Gillette has dominated the market for razors and blades in India, like it has globally. This had ensured premium valuations for the stock on Dalal Street for years, but that may change soon. The demand for razors is shrinking in developed markets, as facial hair becomes fashionable. A similar story may play out in India.

China controls the global physical supply chains. It’s now making a concerted bid to capture digital supply chains as well through its digital Belt and Road Initiative (BRI). It aims to wrest global leadership from the US, at a time when the physical BRI corridor appears unviable after the pandemic. India is a vital cog in Beijing’s plans.

P&G subsidiary Gillette has dominated the market for razors and blades in India, like it has globally. This had ensured premium valuations for the stock on Dalal Street for years, but that may change soon. The demand for razors is shrinking in developed markets, as facial hair becomes fashionable. A similar story may play out in India.

Bhatia and his Bengaluru-based wealth-management company Minance are under scrutiny. Investors and former employees narrate instances of alleged mis-selling, default on payments, and related-party transactions. Add to it, dealings in high-frequency trading, fixed-income scheme, and unlisted shares. Bhatia refutes all the allegations and says he has received only one formal query from Sebi.

Ventilators are complicated devices. Due to their vast manufacturing experience, automakers were a natural choice for making them. While Maruti joined hands with a startup, M&M put its R&D strength to use and is planning to utilise one of its plants for testing and manufacturing. Both have achieved 70% localisation, making their products affordable.

Transport companies have suffered huge losses in the last two months. After the lockdown, many unorganised operators, who comprise 85% of the market, may not be able to survive due to measly demand, low freight rate and capacity utilisation, and their inability to arrange for upfront costs. The stimulus and a revised definition for MSMEs may not help.

Ventilators are complicated devices. Due to their vast manufacturing experience, automakers were a natural choice for making them. While Maruti joined hands with a startup, M&M put its R&D strength to use and is planning to utilise one of its plants for testing and manufacturing. Both have achieved 70% localisation, making their products affordable.

Previous Edition 05 Jun

Four CEOs across a decade have struggled to raise Wipro’s growth in line with that of the industry. Neemuchwala, who joined in 2015 to script a turnaround, left earlier this month, midway through the process. New CEO Thierry Delaporte has to complete the job, which may turn out to be a tougher task.

Although regulations have helped corporate India to kick-start the gender diversity agenda in boardrooms, it seems more an enforced development than out of the belief that diversity adds value. Women still only have token presence on boards, and companies must take the initiative in making gender equality a natural outcome. Indeed, the glass ceiling remains intact in India, and globally.

Here you will find a curated collection from our relentless coverage on the outbreak and its implications, spanning across sectors and situations. As always, bringing together ET Prime's deep reportage and nuanaced analysis of issues, these stories will keep you up to date on what's unfolding and what's up next.

As alcohol consumption among millennials grows feeble, AB InBev and UB Group, the country's beer-market leaders, have been steadily pushing their non- and low-alcoholic beer brands through grocery-retail channels. Time for India’s soft-drinks market to brace for stiff competition.

As alcohol consumption among millennials grows feeble, AB InBev and UB Group, the country's beer-market leaders, have been steadily pushing their non- and low-alcoholic beer brands through grocery-retail channels. Time for India’s soft-drinks market to brace for stiff competition.

About half of standalone restaurants may not reopen even after the pandemic is over. It is worth noting that business sustainability often boils down to how costs are managed. In such a scenario, owing to its cost advantages and higher efficiency, the franchise model offers an excellent opportunity with a 400% higher chance of generating profits.

While the restrictions are preventing young consumers from leisurely browsing through store shelves, pay cuts and layoffs are forcing them to keep a tab on their wallet. However, their behaviour is proving to be price inelastic. If there’s a premium brand or category essential to their habits, they are sticking to it regardless of price and retail access.

Bira was under extreme pressure from new entrants and old veterans of the beer industry just a few months ago. The lockdown has hurt many of its competitors financially. Founder Ankur Jain has raised fresh capital, got new breweries operational, and the summer’s not over yet.

FreshToHome’s robust supply chain has given it an edge over its competition during the lockdown. Its exhaustive back-end integration, which includes sourcing freshwater fish and poultry directly from fishermen and farmers to ensure quality and freshness, has kept delivery possible during such trying times. However, procuring seafood and red meat is still a challenge.

The lockdown was imposed at a time when iD Fresh Food logged its highest monthly sales numbers. PC Musthafa, CEO and co-founder of the food startup, had to decide whether to shut down temporarily or continue operations. Having opted for the latter, he shares his learning on coping with the crisis.

Kirana stores rule the packaged consumer-goods distribution but are derided as inefficient. They have used some of this ‘inefficiency’ and some street-fighting ingenuity to keep the supplies of essential goods flowing. While these positive effects may wane, they surely give the general trade more goodwill, and perhaps even the bargaining clout.

The pandemic has brought all negotiations around commissions between the restaurants and the food aggregators to a halt, with the former focussing solely on keeping their heads above water. With the cards in their favour, how food-tech companies respond to this crisis will determine whether restaurants can tide over it or not.

Coming up with an alternative to keep Indians healthy during this lockdown, Cure Fitness, the fitness chain, has launched a new in-app product called Cult.Live. Free to all, allowing interactive workout, the programme has seen 10,000 logins within 20 days for a single dance-fitness session.

It’s the only weapon the world has against Covid-19. In India, a bevy of companies, big and small, is introducing an array of sanitiser products. It’s an easy-to-start business and extremely profitable, but once the pandemic recedes, there could be a shake-out in the sector as well. ET Prime takes a deep dive into the nitty-gritty of the sanitiser industry.

Although regulations have helped corporate India to kick-start the gender diversity agenda in boardrooms, it seems more an enforced development than out of the belief that diversity adds value. Women still only have token presence on boards, and companies must take the initiative in making gender equality a natural outcome. Indeed, the glass ceiling remains intact in India, and globally.

Although regulations have helped corporate India to kick-start the gender diversity agenda in boardrooms, it seems more an enforced development than out of the belief that diversity adds value. Women still only have token presence on boards, and companies must take the initiative in making gender equality a natural outcome. Indeed, the glass ceiling remains intact in India, and globally.

Investor complaints alleging sharp practices and preferential treatment in the AMC have put the focus on the efficacy of trustees who joined recently. The huge exposure to the Piramal-Shriram combine, which crosses the 20% mark in three of the six schemes, is a cause for concern. It’s time for a serious response from regulators on rules governing fund managers.

Altico’s lenders had cleared SSG’s proposal last month and sent it to RBI for final approval. But its management and staff have written to the central bank about some legal proceedings against the acquirer, casting a shadow over its “fit and proper” status under the law. Employees are also worried that SSG might wind down the business, jeopardising their jobs.

Can the force majeure or Act of God clause for a standard contract and the material adversity clause for an M&A become a potential deal-breaker during Covid-19? ET Prime got in touch with a legal firm and an investment banker to break down the possible impact of these clauses. We also considered the possible solutions.

An interim chief, infrastructural constraints, and thousands of pending cases — the National Company Law Appellate Tribunal is weighed down by numerous challenges. Stakeholders say that even the latest step of notifying a new bench at Chennai is unlikely to bring immediate relief. It’s a crisis of sorts for the judicial system for resolving corporate disputes.

Deloitte, KPMG, and other large firms oppose most of the key measures proposed in a controversial discussion paper floated by the Ministry of Corporate Affairs last month. The auditors say the focus should be on making the smaller firms big and improving quality, rather than breaking down the bigger ones through limits and quotas.

Doit Urban Ventures, which allegedly received kickbacks from DHFL, routed it to other group companies. A web of firms entangled in related-party deals and circular transactions raises a stink in the Yes Bank episode. In this deep dive, ET Prime connects the dots for you.

Even though Dharamshi-Jhunjhunwala consortium’s resolution plan has been approved by NCLT, Kotak Investment Advisors might appeal in the Supreme Court. This is its second attempt against the winning bid after the Bombay High Court rejected its plea last month.

Delhi-based UVARCL has emerged as the highest bidder for Anil Ambani-promoted Reliance Communications, which is under NCLT proceedings. ET Prime's investigation has unearthed links of various colourful characters associated with the bidding company. Lenders would do well if they evaluate the offer before taking the final call on January 31.

In the past few years, NCLT benches in non-metros have heard some big-ticket litigations. More tribunal benches have been set up in cities such as Jaipur, Amravati, Indore, and Kochi over the last year. This has opened opportunities for law firms, with many capitalising by either setting offices in tier II and III cities or eyeing to start one.

Contrary to the perception that higher stimulus will lead to an unsustainable debt burden, the reality might be just the opposite. By triggering growth, a debt-funded stimulus enables higher revenues for the government, reducing the size of borrowing programmes. The ideal strategy for the Modi government would be a direct and targeted stimulus funded by lower-yielding debt.

Contrary to the perception that higher stimulus will lead to an unsustainable debt burden, the reality might be just the opposite. By triggering growth, a debt-funded stimulus enables higher revenues for the government, reducing the size of borrowing programmes. The ideal strategy for the Modi government would be a direct and targeted stimulus funded by lower-yielding debt.

According to reports, over 2 lakh hectares of crops have been damaged by the swarms since the beginning of May. With the kharif sowing season knocking at the door, the jolt would be severe for the farmers who have already been worse-off due to the pandemic. The invasion will also stoke inflation.

Transport companies have suffered huge losses in the last two months. After the lockdown, many unorganised operators, who comprise 85% of the market, may not be able to survive due to measly demand, low freight rate and capacity utilisation, and their inability to arrange for upfront costs. The stimulus and a revised definition for MSMEs may not help.

As the economy reopens in a phased manner, finding the necessary workforce across sectors will be difficult at least for the first six months. Industries that are relatively more labour intensive will have to pay a higher price. For sure, the country is heading towards an acute labour shortage in the medium term.

Technology and BFSI companies occupy more than half of the country’s office space. With the service sector increasingly adopting work from home policy and tenants looking for smaller spaces to cut costs and stay afloat amid the prolonged lockdown, the dynamics of commercial real estate are set to change.

Prime Minister Narendra Modi feels India can emerge as an alternative investment destination to China, and the US, too, believes it’s a possibility. But even a China in retreat may not shift global supply chains to India. Cheap labour won’t be a game changer for India in an era of automation, and at a time when near-shoring will become more relevant.

Covid-19 has thrown up unprecedented challenges for businesses globally. Experts say it’s an opportunity for the Indian industry to capture companies and investments migrating from China. But India has stiff competition from other low-cost destinations in Asia – and some Chinese companies – for a share of this pie, Mohit Bhasin, partner, KPMG, tells ET Prime. Excerpts:

The reserves of the Employees’ State Insurance Corporation are intended to be a social-security net for workers. But a debate is raging on whether the government can dip into them in these troubled times to provide financial assistance to the 35 million insured. It may pump-prime the economy and boost short-term demand, but can jeopardise the scheme’s stability.

Exams have been postponed. There’s no clarity on when college classes will start, especially for those who have got acceptances from universities abroad. The uncertainty about the future is causing intense stress among students and parents. Many of them are now reviewing the financial cost and assessing if joining an online programme or a job-focused course would make better sense.

A fiscal lifeline to the industry has to be conditional. There are tools that can ensure the exchequer gets good returns on the money invested to rescue companies. The TARP mechanism used by the US during the 2008 crisis is a classic example. For India, the returns from a private-sector stimulus can ease fiscal deficit by 5 bps.

A bunch of private players in Uttar Pradesh, Bihar, and Jharkhand are trying to serve under-electrified villages with mini-grids, or local electrical networks, which generate electricity primarily from solar panels. While this is creating new sources of livelihood for the villagers and increasing their income levels, there is a big question mark on the viability of the investment.

A bunch of private players in Uttar Pradesh, Bihar, and Jharkhand are trying to serve under-electrified villages with mini-grids, or local electrical networks, which generate electricity primarily from solar panels. While this is creating new sources of livelihood for the villagers and increasing their income levels, there is a big question mark on the viability of the investment.

Around 17% of the electricity in the country is not billed for. With smart meters, discoms can track power consumption in real time, generate bills, and enforce timely payment. But the real problem behind their sagging finances lies in unpaid bills by state-government departments, stretched working-capital cycles, inadequate tariff hikes, and power theft.

Fans account for 20% of the electricity consumed by the Indian households, but never feature in our energy-saving plans. Atomberg Technologies, set up by two IIT Bombay graduates, wants to change this with a smart ceiling fan, which uses a technology that can reduce power consumption by 65%. Can it make a mark in an overcrowded market?

It’s a double whammy for India. Its refiners and oil marketers can’t benefit from a benign crude as there is no demand in the economy due to lockdown. In fact, they are facing margin squeeze and heavy inventory losses. Upstream companies stare at low realisation per barrel and 80%-90% dip in profit.

With crude oil trading at record lows, it’s an opportune time for India to build its strategic reserves. But considering the tight fisc, funding could be a challenge. Also, a slowing economy may not have the appetite to consume high volumes of oil in the short term. Will this be another missed opportunity?

Analysts expect the incumbents and newbies to fight the impending battle in cities and towns to own customers who consume diesel, a fuel that comprises 40% of India’s total oil demand. What could turn the battle fiercer is the rise of natural gas-driven vehicles and electric vehicles aided by the government’s policy thrust and technological innovations.

Global crude-oil demand may just collapse in 2020. As the global economy faces a likely recession, crude prices have gone into a tailspin, sinking over 30% this year. Still, it helps India – cuts the mammoth import bill, keeps fuel inflation in check, and RBI can sustain a soft interest-rate regime to boost growth. But first: the Modi government must contain the coronavirus.

The country is facing a glut in power-generation capacity, with plants either underutilised or lying idle, especially in coal-based power. Moreover, foreign investors are willing to finance only green projects, and the government also has set a massive target for renewables. Does this signal the end of capacity addition in coal-based generation?

An RTI reply has revealed that the Power Finance Corporation has claims worth INR65,000 crore pending in NCLT — much higher than what the power-sector lender has disclosed in its investor presentation. While the company says efforts under various debt-recovery and restructuring mechanisms are on, the falling health of India’s power sector could play a spoiler.

India has recently asked Qatar, the largest gas exporter in the world, to come to the negotiation table and demanded to reduce prices under the existing long-term supply contracts to make LNG more affordable to consumers.

After the 2008 meltdown, countries like South Korea and China that invested more in the green economy bounced back as more resilient economies. A breakdown of the stimulus package on Wednesday, however, shows investments in sustainability or natural capital is not India’s priority at the moment.

After the 2008 meltdown, countries like South Korea and China that invested more in the green economy bounced back as more resilient economies. A breakdown of the stimulus package on Wednesday, however, shows investments in sustainability or natural capital is not India’s priority at the moment.

Scientific evidence is increasingly pointing out that deforestation is a leading cause of animal-to-human transmission of viruses, resulting in deadly diseases such as Covid-19. However, India continues to give clearances to a slew of projects involving large-scale encroachment and disturbance of forest land.

The icon of environmental conservation believes the ongoing pandemic could bring a change in the way human beings treat Mother Nature. Emphasising that the root cause of the problem is our disrespect towards wildlife, Goodall says destruction of natural habitats can lead to economic costs of an unprecedented scale.

The human society is now locked up inside their homes. In this moment, however temporary, nature and animals are beginning to roam the streets, rolling back geological time. When this crisis ends, perhaps humans could learn to be kinder to other species.

The Central Pollution Control Board is planning to conduct a pilot project with a new device, ShudhVayu. What works in its favour is a simple technology and affordable pricing. But for its makers to attain scale, more car owners will have to come forward and clean the mess they have created.

While locust attacks are nothing new, the swarms which have ravaged crops in Rajasthan and Gujarat of late stand out because of their origins. The attacks that have cost the country at least INR100 crore are linked to the cyclones that caused unusually heavy rainfall to the Arabian desert in 2018, providing the locusts fertile breeding grounds.

Coal power has continued to get subsidies even as the government tries to project an image of development towards renewables. Rather, the measures it has proposed will push the stressed renewables industry further against the wall.

First, the “green” is not that of forests, but of agricultural produce. Practices such as multicropping, aided by increasing use of fertilisers and irrigation, have resulted in more green area. Second, the high, and often irresponsible, use of fertilisers is a source of greenhouse-gas emissions.

The forest cover in the country has increased by 3,976 square kilometres in two years. But very-dense and moderate forests have degraded to open forests, scrub, and even non-forest areas at a high rate. This means India’s green cover now has lower carbon-sequestration capacity, which helps fight climate change.

Pools of permanently warm sea across the globe are becoming warmer and are expanding. This is affecting a tropical-weather cycle called the Madden-Julian Oscillation, which could lead to poor rainfall in India and severely impact its rain-dependent agri-economy. However, the country has no plan to deal with the impending crisis.

Bhatia and his Bengaluru-based wealth-management company Minance are under scrutiny. Investors and former employees narrate instances of alleged mis-selling, default on payments, and related-party transactions. Add to it, dealings in high-frequency trading, fixed-income scheme, and unlisted shares. Bhatia refutes all the allegations and says he has received only one formal query from Sebi.

Bhatia and his Bengaluru-based wealth-management company Minance are under scrutiny. Investors and former employees narrate instances of alleged mis-selling, default on payments, and related-party transactions. Add to it, dealings in high-frequency trading, fixed-income scheme, and unlisted shares. Bhatia refutes all the allegations and says he has received only one formal query from Sebi.

Among the fintech players, digital lending is the worst hit by the Covid-19 crisis. As companies cry for a ‘moratorium on the moratorium’ given by RBI, the industry will see a high mortality rate. Smaller firms that can hold on for six months might be up for acquisitions, while the big boys will become bigger. Last of a three-part series.

Cash is king, believe Capital Float’s founders Gaurav Hinduja and Sashank Rishyasringa. The digital-lending startup is undertaking minimal disbursals and has stopped all discretionary spends. It’s building sufficient collections capacity to ensure NPA curves are flattened post lockdown. It’s also reassuring all stakeholders. The company’s ‘perfect storm’ over the past year, they say, had prepared it for this tsunami.

The lockdown has a nightmarish impact on the digital-payments startups. While they are looking for ways to keep their heads above the water, no one is planning to cut jobs. But after the pandemic, a different industry will emerge, with smaller players falling off the fintech map. Second of a three-part series.

After bringing forth certain changes in the way PolicyBazaar works and does business, co-founder and group CEO Yashish Dahiya says he knows how to operate under the current situation and come out stronger from the crisis.

The offline-payment players are in a spot. The PoS operations are down manifold, and domestic remittance is at an alarmingly low level after millions of migrant workers returned to their homes. First of a three-part series on challenges faced by the fintech firms in these trying times and what it means for the employees.

Before the debacle, Yes Bank was a leader in digital-payments solutions and was powering 20-25 fintech startups. What had made it possible was a fintech-focused playbook and a relentless team headed by Ritesh Pai. Fast execution, ability to take risk and spot future winners, and a sound business model helped this team pull off what rivals could not.

A majority of the fintech players have only one bank processing UPI payments. This led to a complete blackout when the RBI put Yes Bank, which controlled 40% of the UPI universe, on moratorium. While the RBI never made policies from the fintech perspective, the March 5 event will have a bearing on smaller banks and fintech players.

RBI’s proposed write-down of Yes Bank’s perpetual bonds has grave implications for India’s ailing financial system. The country can’t be seen as indifferent to creditor obligations. It couldn’t have come at a worse time — just when India is making efforts to quickly expand its small bond market and tap international debt markets through a larger presence in global bond indices.

In the last two years, the ecosystem has lost more than just business. Even though the Supreme Court’s judgment on Wednesday will reduce friction for crypto startups, attract funding, and boost innovation, the lack of clarity on the legality of the technology can open a new front. The next challenge: getting a regulator that can set things in motion.

Due to new norms, workplaces will have to decongest and able to accommodate only 30%-40% of the staff. Given the looming threat of a recession, not many companies will invest in bigger office spaces. While work from home will continue even after lockdown, landlords should prepare for what will unfold in the next two-three quarters.

Due to new norms, workplaces will have to decongest and able to accommodate only 30%-40% of the staff. Given the looming threat of a recession, not many companies will invest in bigger office spaces. While work from home will continue even after lockdown, landlords should prepare for what will unfold in the next two-three quarters.

Road-construction companies and toll operators are disappointed with the measures announced by the finance minister recently. Force majeure is one clause in contracts that could help them. While NHAI may be stretched right now to give immediate financial relief, the intention to resolve the private partners’ woes is all that matters.

Following the viral outbreak, sectors that were already reeling from a slowdown, have deferred plans to invest in warehousing. E-commerce and retail have provided some relief, but the warehousing industry is expected to remain subdued for a couple of quarters. What are the chances of it bouncing back when the situation becomes normal?

Amid a bloodbath in mid- and small-cap construction stocks, KNR has relatively stood firm. With investors increasingly trimming exposure to debt-heavy infrastructure businesses, KNR has a clear advantage on that front. However, the most important question is: can an infrastructure company be wary of debt and still be successful in business for long?

NHAI figures show the participation of listed entities has not just decreased but diminished, and new companies with INR1,000 crore annual revenue and moderate credit-rating risk are entering the fray. While the highways authority evaluates bidders under financial and technical criteria, it’s high time to introduce corporate governance as the third parameter.

The Kolkata Metro Rail Corporation inaugurated the East-West corridor on February 13, which will link the twin cities of Kolkata and Howrah. At present, only the elevated corridor is functional, but upon completion of the final stretch by 2022, the INR8,575 crore project will be the first underwater suburban rail transport in India.

After the runaway success of one-BHK flats in Mumbai, Delhi builders’ bet on the format bombed spectacularly. The launch and absorption of one-BHK flats in NCR in 2019 were the lowest in a decade. Spoilers: buyers’ fascination with bigger houses, availability and affordable pricing of bigger flats.

Warehousing is emerging as the hottest asset class for both real-estate companies and deep-pocketed private-equity firms. But the real chase is for world-class quality at extremely competitive rentals.

In October 2019, Sadbhav Infra announced its plans to remerge with parent Sadbhav Engineering, owing to rising debt and falling profitability. The deal has sounded the death knell for Sadbhav Infra’s investors, who had believed in the company’s asset-ownership pitch back in 2015, at the time of listing. But for parent Sadbhav Engineering, it’s a blessing.

Competitors and analysts called the global investor “too aggressive” when it won the first toll-operate-transfer (TOT) bundle of highways — a large part of it on the Golden Quadrilateral — at a hefty premium to NHAI’s base auction price. A year and a half later, it seems Macquarie outwitted rivals and picked up NHAI’s best assets.